Tel. 23344918,23747435 23363692, 23747436 Fax: 23747483 COMMUNIST PARTY OF INDIA (MARXIST) Central Committee A.K. Gopalan Bhawan, 27-29, Bhai Vir Singh Marg New Delhi 110 001 Website: http://www.cpim.org email: [email protected] Report on Current Developments (Adopted at the January 8-10, 2009 Meeting of the Central Committee held at Kochi) International The global economic crisis has been dominating the international scene in the past three months. The financial crisis soon became a full-fledged crisis of the real economy and a global recession has set in with all its ill effects on employment, loss of livelihood and houses for people around the world. The period also saw the brutal Israeli onslaught on Gaza heightening the war on the Palestinian people by a lawless state which has the backing of the United States. In the neighbourhood of India, an important development has been the elections in Bangladesh which has led to a sweeping victory for the Awami League led alliance. Global Economic Crisis The global recession precipitated by the financial crisis has deepened considerably over the past two months. Latest IMF projections (World Economic Outlook Update, November 2008) suggest that the world economy will grow only at 2% in 2009, with the advanced economies taken together, experiencing negative growth (-0.3%) during the year. The US GDP is projected to contract by 0.7%, Euro Area GDP by 0.5% and UK GDP by 1.3% in 2009. According to the IMF, this will be the first annual contraction, i.e., absolute fall in output, experienced in the advanced economies in the post-war period. All the major capitalist Centres – USA, Europe and Japan – are simultaneously in recession. The unemployment rate in the US had already risen to 6.7% in November 2008, with 18.7 lakh jobs being lost there since November 2007. The unemployment rates in France and Germany had risen to 8.2% and 7.1% respectively by October 2008 (ILO). With the recession deepening in 2009, unemployment in the advanced capitalist economies would rise further. The initial response of the Governments in the advanced capitalist countries to the financial crisis was to announce bailout packages for the financial companies, which had made enormous losses. Recapitalisation of private financial institutions with public funds took the shape of part nationalisation of several banks and financial companies. This was accompanied by coordinated interest rate cuts by Central Banks across the world. These financial and monetary policy measures, however, have failed to prevent a deepening recession, which is now generally believed 1 to be the worst ever since the Great Depression. The Governments of the advanced capitalist countries are now falling back upon fiscal interventions to salvage the situation. Even the bastion of neoliberal orthodoxy, the IMF, has recently called for a “large fiscal stimulus totaling 2% of global GDP”, to address the crisis. While the $700 billion (Rs. 34.3 lakh crore) bailout package announced in the US in October 2008 was primarily meant to compensate the losses made by the private financial institutions and other corporates, China announced a fiscal package in November 2008 amounting to $586 billion (4 trillion yuan or Rs. 28.7 lakh crore) which is nearly 14% of China’s GDP to be spent over the next two years, aimed at increasing state expenditure in areas like housing projects for low-income urban residents, farmers’ livelihood and rural infrastructure, the construction of railway, road and airports, education and public health care, ecological construction, technological innovations and disaster relief. After much debate between Britain and Germany, the EU has also adopted a nearly $ 280 billion (200 billion euros or Rs. 13.7 lakh crore) fiscal package including tax cuts and public spending plans. The crisis is exposing the hazards of neo-liberal economic policies and the advanced capitalist countries are being compelled to resort to direct State intervention as the way out of the crisis. However, the extent of the crisis is such that these fiscal measures may turn out to be insufficient. There is also apprehension that the entire extent of financial losses by banks and other private companies are yet to be revealed. More financial shocks would only aggravate the crisis and worsen the prospects of economic recovery. All efforts would be made by the imperialist countries to shift the burden of the crisis on to the third world and for the ruling classes to shift the burden on to the working class and the peasantry. The global economic crisis provides the opportunity to challenge the neo- liberal orthodoxy and to propagate among the people that the real alternative to predatory capitalism is socialism. Presidential Election in USA Barrack Obama won the Presidential election defeating the Republican candidate John McCain. The victory marked a historic step as, for the first time, the United States will have a black President. The clear victory for Obama was a rejection of the record and policies of the Bush regime. The growing economic crisis which has badly affected the American people was a prime reason for the victory coupled with the disillusionment with the prolonged war in Iraq. High expectations have been aroused by Obama’s victory as his main campaign platform was for change. However, with the present political set- up in the United States, the prospects for any change in basic policies seem remote. The American people are more concerned about how Obama will tackle the economic crisis and revive the economy and jobs. Unlike the unilateral style of the Bush Presidency, Obama will try to carry the allies of the US alongwith him in projecting and implementing America’s interests. The team assembled by Obama confirms that not much will change. With 2 Hillary Clinton as the Secretary of State and Robert Gates continuing as the Secretary of the Defence, there will be a continuum in US imperialist interests and foreign policy. Israeli Aggression The six month cease fire between Israel and Hamas ended in December 2008. Israel tightened the blockade of Gaza by preventing supplies by trucks to the Gaza strip. On the pretext that rockets continue to be launched from Gaza into Israel, the Israeli air force began a heavy aerial bombardment from December. This was followed by the invasion by ground troops. The offensive is continuing. In the two weeks after the US attack began over 700 people including a large number of children were killed. This total war against the 1.5 million Palestinians has the backing of the US which endorses the Israeli aim of eliminating the Hamas. Since 2006 when Hamas won the elections to the Palestinian authority, the Israel-US axis has been aiming to isolate and suppress the Hamas. The split in the Palestinian camp between the Fatah and Hamas has helped the Israelis. There are no effective steps for a ceasefire from the Security Council, as the US has blocked efforts in that direction. The Manmohan Singh government has issued statements calling for a halt to the attack, but it has not done anything concrete to get pressure mounted on Israel. It is going ahead with the military and security collaboration with Israel. Recently it has signed a Rs. 10 thousand crore deal for missile production collaboration with Israel. The campaign of solidarity with the Palestinian people should also demand an end to such collaboration which militates against India’s traditional support to the Palestinian cause. Iraq : New Security Agreement The Iraqi parliament and government have approved a security pact with the United States. As per the agreement, the terms for the continuance of the 150,000 US and foreign troops are spelt out when the United Nations mandate expires by December 31st. The agreement provides for foreign troops to withdraw from Iraqi cities and towns by June 2009 and from the country entirely by end 2011. This means that the troops will remain in bases after June 2009. From January 1, 2009 US troops will conduct operations with the approval of the Iraqi government and in coordination with Iraqi authorities. By this agreement, the US troops will continue to stay till end 2011. How this will match with the 16 month withdrawal time-table of President Barack Obama remains to be seen. As per the plan drawn up which meets Obama’s strategy too, the US will withdraw 8000 troops by February from Iraq and deploy them in Afghanistan. The plan is to increase US troops in Afghanistan by 20,000 more to contain the growing Taliban insurgency. Under Obama, there will therefore be an escalation of the war in Afghanistan. 3 Greece Widespread protests erupted throughout the country after the police shot dead a 15 year-old boy. This led to an outburst in Athens and all other cities which continued for three weeks. A number of clashes took place between the police and the protesting youth. The growing anger among the people on the right-wing government’s failure to tackle the economic crisis effectively was one of the main reasons behind the widespread protest. Two successful general strikes took place in Greece in the previous three months against the anti-people policies of the New Democracy government. The striking workers blocked schools, hospitals and transportation services and half of Greece’s factories were brought to a 24- hour halt. The strike demanded hike in minimum wages and protested against rising prices and privatization plans. The Greek struggle shows how the impact of the global economic crisis and the efforts of the governments to impose burdens on the people are going to meet with popular resistance. Latin America Latin America continues to be the theatre of an intense political conflict between the Left and progressive forces and the rightwing forces who have the backing of the United States.